Effective July 23, the Philippine Charity Sweepstakes Office (PCSO) will implement its price adjustments on its Lotto, Sweepstakes, and Keno tickets.
Said price increase is in compliance with the Tax Reform for Acceleration and Inclusion (TRAIN) law, the first package of the Comprehensive Tax Reform Program (CTRP) conceived by President Rodrigo Duterte’s administration, which aims to correct a number of deficiencies in the tax system and simplify its scheme.
Since January, all PCSO lotto prizes are taxed 20% if the amount of the prize or winnings is above P10,000.
“We have no option but to abide by the law and increase our ticket costs from P20 to P24 for Lotto; from P10 to P12 for Digit Games and Keno, P5 to P6 for traditional Sweepstakes tickets,” explained PCSO General Manager Alexander F. Balutan.
PCSO has two existing lottery systems. For Luzon, it’s with Philippine Gaming and Management Corporation (PGMC). The firm’s contract, however, will end on August 21.
Visayas-Mindanao is held by Pacific Online Systems Corporation (POSC) and its contract will expire on July 31.
According to Arnel Casas, Officer-in-Charge Assistant General Manager for Gaming Sector, he recommended the postponement of the implementation of lotto ticket price increase upon the receipt of a letter from POSC.
The letter, dated July 5, states that the start of downloading of the program fix to their terminals will be from July 9 to 21 and will take about two weeks for their program fix to be completely downloaded.
“The objective really is to have a simultaneous/synchronized implementation nationwide of all online lottery system providers of changes to reflect DST (Documentary Stamp Tax) to lotto tickets. This is in compliance to the TRAIN law,” said Casas.
CoA report vs Keno games
PCSO welcomed the report of the Commission on Audit (CoA) report regarding the possible depletion of funds due to online Keno operations.
“We welcome COA audit report regarding our transactions, but we would like to assure you that we are not violating any law and we are cognizant of our obligations and responsibilities,” said Balutan.
This in response to COA’s warning against the agency over “questionable” transactions worth more than P10.17 billion intended for charity and programs and medical assistance and of fund depletion because of the online Keno gaming operations, which incurred deficit in its prize fund from 2006 to 2017, accumulating P4.283 billion as of December 31, 2017.
From January to June of this year, the overall PCSO revenue already hit the P25 billion mark, P25,833,181,304.10 to be exact—an increase of 27.25%, where Lotto and digit games are still at the forefront with P12.5 billion sales; while Instant Sweepstakes with P727 million sales.
“Keno had P2.3 billion sales, an increase of 10.36% in five months alone,” said Balutan in an earlier statement.
“The perceived deficit in the prize fund of the Keno game is being addressed by the PCSO, actually, an approved prize payout structure was supposed to be implemented last year,” said Arnel Casas, office-in-charge assistant general manager for gaming sector.
Casas explained that the implementation of the TRAIN law required a substantial amount of 20% Documentary Stamp Tax (DST) to be imposed on the total sales of the Keno, which greatly affected the implementation of the approved fund allocation.
“It gave a smaller percentage to fund allocations particularly to the prize payout structure of the Keno game. As a result of the new scheme, the game became less attractive to the gaming patrons and players,” said Casas.
“The same also delayed the scheduled implementation, as the PCSO needs to go back to the drawing board to further study and analyze its effect,” he added.
A new revenue allocation with the inclusion of the DST and new prize payout structure will be implemented for the Keno game. This will require system and gaming software change which under normal process will take around three to six months to complete.
Once implemented, depending on the support and response of the gaming public to the new prize structure and the amount of sales realized, the PCSO shall decide on whether to continue or discontinue the game.
“In the end, the major concern and beneficiary from all these is all the PCSO charitable undertakings which are dependent on PCSO games including keno game. PCSO has raised P5.8 billion in charity which is the positive profit from this game aside from the taxes paid and operating funds raised,” said Casas.